<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-24048
GEERLINGS & WADE, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2935863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
960 Turnpike Street, Canton, MA 02021
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (617) 821-4152
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Par Value Date Number of Shares
--------- ---- ----------------
Common Stock $ .01 November 8, 1996 3,777,525
<PAGE>
GEERLINGS & WADE, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at December 31, 1995 and
September 28, 1996 (Unaudited)........................... 2
Statements of Operations for the Quarters Ended September
30, 1995 and September 28, 1996 and for the Three
Quarter Periods Ended September 30, 1995 and September 28,
1996 (Unaudited).......................................... 3
Statements of Cash Flows for the Three Quarter Periods
Ended September 30, 1995 and September 28, 1996
(Unaudited).............................................. 4
Notes to Financial Statements............................ 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 6
PART II. OTHER INFORMATION
Item 5. Other Information........................................ 9
SIGNATURES ................................................................ 10
</TABLE>
1
<PAGE>
PART 1. FINANCIAL STATEMENTS
Item 1. Financial Statements
GEERLINGS & WADE, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 28,
1995 1996
------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 809,828 $ 713,164
Accounts receivable 61,970 267,823
Inventory 12,033,565 10,860,867
Prepaid mailing costs 800,088 755,317
Prepaid expenses 407,848 468,583
Refundable income taxes 798,634 203,681
Deferred income taxes 348,000 532,912
----------- -----------
Total Current Assets 15,259,933 13,802,347
----------- -----------
PROPERTY AND EQUIPMENT, AT COST 1,919,328 2,516,378
Less--Accumulated Depreciation 598,944 934,780
----------- -----------
1,320,384 1,581,598
----------- -----------
OTHER ASSETS 136,234 161,035
----------- -----------
$16,716,551 $15,544,980
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ 3,015,412 $ 3,005,863
Accounts payable 2,785,527 1,937,354
Deferred revenue 415,114 226,671
Accrued expenses 349,883 361,666
----------- -----------
Total Current Liabilities 6,565,936 5,531,554
----------- -----------
DEFERRED REVENUE, LESS CURRENT PORTION 417,637 548,650
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value -
Authorized-1,000,000 shares
Outstanding-none
Common stock, $.01 par value-
Authorized-10,000,000 shares
Issued and outstanding-3,775,243
and 3,777,525 shares in 1995
and 1996, respectively 37,752 37,775
Additional paid-in capital 9,705,327 9,716,255
Retained earnings (deficit) (10,101) (289,254)
----------- -----------
Total Stockholders' Equity 9,732,978 9,464,776
----------- -----------
$16,716,551 $15,544,980
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
GEERLINGS & WADE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Three Quarter Period Ended
<S> <C> <C> <C> <C>
September 30, September 28, September 30, September 28,
1995 1996 1995 1996
------------- ------------- ------------- -------------
Sales $ 6,977,545 $ 7,170,704 $ 20,869,862 $ 22,030,693
Cost of Sales 3,720,106 3,956,956 11,108,990 12,024,052
------------- ------------- ------------- -------------
Gross Profit 3,257,439 3,213,748 9,760,872 10,006,641
Selling, general and administrative
expenses 3,597,940 3,192,017 9,123,657 10,260,230
------------- ------------- ------------- -------------
Income (loss) from operations (340,501) 21,731 637,215 (253,589)
Interest income (expense), net (19,825) (76,914) 45,483 (209,564)
------------- ------------- ------------- -------------
Income (loss) before income taxes (360,326) (55,183) 682,698 (463,153)
Provision (benefit) for income taxes (132,000) (21,000) 260,113 (184,000)
------------- ------------- ------------- -------------
Net income (loss) $ (228,326) $ (34,183) $ 422,585 $ (279,153)
============= ============= ============= =============
Net income (loss) per share $ ( 0.06) $ (0.01) $ 0.11 $ (0.07)
============= ============= ============= =============
Weighted average common shares
outstanding 3,777,000 3,776,000 3,773,000 3,776,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
GEERLINGS & WADE, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three QuarterPeriod Ended
September 30, September 28,
1995 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 422,585 $ (279,153)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities --
Depreciation and amortization 221,380 356,144
Deferred income taxes -- (184,912)
Changes in current assets and
liabilities --
Accounts receivable (239,439) (205,853)
Inventory (7,525,141) 1,172,698
Prepaid mailing costs (1,696,918) 44,771
Prepaid expenses 53,689 (60,735)
Refundable income taxes -- 594,953
Accounts payable 2,745,853 (848,173)
Deferred revenue 153,449 (57,430)
Accrued expenses (49,211) 11,783
------------- -------------
Net cash provided by (used
in) operating activites (5,913,753) 544,093
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment,
net (898,329) (597,050)
Change in other assets (34,906) (45,109)
------------- -------------
Net cash used in investing
activities (933,235) (642,159)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit 2,514,498 7,083,951
Repayments under line of credit (671,000) (7,093,500)
Proceeds from employee stock option
and purchase plans 286,974 10,951
------------- -------------
Net cash provided by
financing activities 2,130,472 1,402
------------- -------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (4,716,516) (96,664)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 5,132,756 809,828
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 416,240 $ 713,164
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period -
Interest $ -- $ 212,951
============= =============
ITEMS NOT AFFECTING CASH FLOWS:
Income tax benefit of stock option
exercises $ 59,862 $ --
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Notes to Financial Statements
1. Basis of Presentation
---------------------
The interim period information set forth in these financial statements is
unaudited and may be subject to normal year end adjustments. In the opinion of
management, the information reflects all adjustments, which consist of normal
recurring accruals that are considered necessary to present a fair statement of
the results of operations of Geerlings & Wade, Inc. (the "Company") for the
interim periods presented. The operating results for the one and three quarter
periods ended September 28, 1996 are not necessarily indicative of the results
to be expected for the fiscal year ending December 31, 1996.
The financial statements presented herein should be read in conjunction with the
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995. Certain information in these footnote
disclosures normally included in financial statements has been condensed or
omitted in accordance with the rules and regulations of the Securities and
Exchange Commission.
2. Net Income (Loss) per Share Data
--------------------------------
Net income (loss) per share is computed by dividing net income by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. Common stock equivalents, which are calculated
using the treasury stock method, are included in the computation of weighted
average common shares outstanding when their effect upon earnings per share is
dilutive.
3. Certain Relationships and Related Transactions
----------------------------------------------
The Company has a credit facility (the "Credit Facility") with The First
National Bank of Boston ("Bank of Boston"). One of the Company's outside
directors is employed as a senior executive with Bank of Boston. The Company
believes that the Credit Facility provides terms no more or less favorable than
terms that may otherwise be offered by other lending institution.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Geerlings & Wade, Inc. (the "Company") is a direct marketer of premium
wines and wine-related merchandise to retail consumers. The Company currently
maintains licensed facilities in thirteen states. Federal, state and local laws
strictly govern the sale of wine in each market served by the Company.
Important Factors Regarding Forward-Looking Statements
The Company may occasionally make forward-looking statements and estimates
such as forecasts and projections of the Company's future performance or
statements of management's plans and objectives. These forward-looking
statements may be contained in SEC filings, press releases and oral statements,
among others, made by the Company. Actual results could differ materially from
those in such forward-looking statements. Therefore, no assurance can be given
that the results in such forward-looking statements will be achieved. Important
factors that could cause the Company's actual results to differ from those
contained in such forward-looking statements, include, among other things, the
factors mentioned under the caption Certain Factors That May Affect Future
Operating Results included elsewhere in this Report.
Quarters Ended September 30, 1995 and September 28, 1996
Sales
Sales increased $193,000 or 2.8% from $6,978,000 in the quarter ended
September 30, 1995 to $7,171,000 in the quarter ended September 28, 1996. The
increase in sales from the prior year resulted from new sales promotions tested
in the quarter and increased house file circulation. These increases were
partially offset by a decrease in sales generated from prospect mailings
resulting from lower circulation. Sales decreased 1.0% in markets in which the
Company has been open longer than one year, and increased $253,000 in markets
open one year or less. The net decline in sales in markets open greater than
one year is primarily the result of lower response to house mailings in certain
markets. The number of twelve-bottle equivalent cases ("cases") sold by the
Company increased by 2,400 or 4.0% from 58,600 in the quarter ended
September 30, 1995 to 61,000 in the quarter ended September 28, 1996. The
average case price decreased by $2.26 or 1.9%, from $116.88 in the quarter ended
September 30, 1995 to $114.62 in the quarter ended September 28, 1996. The
average case price decreased as a result of lower average selling prices for
promotions in the quarter. The average number of cases purchased per customer
was 1.65 in the quarter ended September 28, 1996 compared to 1.47 in the
comparable fiscal quarter of 1995.
Gross Profit
Gross profit decreased $43,000, or 1.3%, from $3,257,000 in the quarter
ended September 30, 1995 to $3,214,000 in the quarter ended September 28, 1996.
Gross profit as a percentage of sales decreased from 46.7% in the quarter ended
September 28, 1995 to 44.8% in the quarter ended September 28, 1996. Gross
profit per case decreased $2.90 or 5.2%, from $55.58 in the quarter ended
September 30, 1995 to $52.68 in the quarter ended September 28, 1996. The
decrease in gross margin percentage resulted primarily from increased sales of
higher priced wines which generally produce a lower gross margin percentage.
Average gross profit per case decreased as a result of the decrease in the
average selling price per case.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $406,000, or 11.3%,
from $3,598,000 in the quarter ended September 30, 1995 to $3,192,000 in the
quarter ended September 28, 1996, while decreasing as a percentage of sales from
51.6% in the quarter ended September 30, 1995 to 44.5% in the quarter ended
September 28, 1996. The net decrease in selling, general and administrative
expenses results from lower marketing expenses associated with mailing via
third-class postage for house mailings and lower prospect mailing circulation,
and lower delivery expense resulting from introduction of a shipping and
handling charge on full case orders. These expense savings have been partially
offset by increased payroll costs associated with additional personnel required
to support existing sales levels.
Interest
Interest expense increased $57,000, from $20,000 in the quarter ended
September 30, 1995 to $77,000 in the quarter ended September 28, 1996, as a
result of an increase in average borrowings under the Company's line of credit.
6
<PAGE>
Three Quarter Periods Ended September 30, 1995 and September 28, 1996
Sales
Sales increased $1,161,000 or 5.6%, from $20,870,000 in the three quarter
period ended September 30, 1995 to $22,031,000 in the three quarter period ended
September 28, 1996. The increase in sales from the prior year comparative period
resulted primarily from an increase in sales derived from house mailings caused
by a higher average case price which offset lower response rates. Sales
decreased 3.0% in markets open longer than one year, and increased $1,800,000 in
markets open one year or less. The net decline in sales in markets open greater
than one year is primarily the result of lower response to house mailings in
certain markets. The number of cases sold by the Company was unchanged from
186,000 in the three quarter period ended September 30, 1995. The average case
price increased by $6.10 or 5.5%, from $109.98 in the three quarter period ended
September 30, 1995 to $116.91 in the three quarter period ended September 28,
1996. The average case price increase resulted from price increases and, in
general, increased sales of higher priced wines in comparison to the same fiscal
period of 1995. The average number of cases purchased per customer increased
from 2.14 in the three quarter period ended September 30, 1995 to 2.27 in the
three quarter period ended September 28, 1996.
Gross Profit
Gross profit increased $246,000 or 2.5%, from $9,761,000 in the three
quarter period ended September 30, 1995 to $10,007,000 in the three quarter
period ended September 28, 1996. Gross profit as a percentage of sales
decreased from 46.8% in the three quarter period ended September 30, 1995 to
45.4% in the three quarter period ended September 28, 1996. Gross profit per
case increased $1.32, or 2.5%, from $52.48 in the three quarter period ended
September 30, 1995 to $53.80 in the three quarter period ended September 28,
1996. The decrease in gross margin percentage resulted primarily from increased
sales of higher priced wines which generally produce a lower gross margin
percentage. Average gross margin per case increased as a result of the increase
in the average selling price per case net of increases in domestic wine costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $1,136,000 or 12.5%,
from $9,124,000 in the three quarter period ended September 30, 1995 to
$10,260,000 in the three quarter period ended September 28, 1996, while
increasing as a percentage of sales from 43.7% in the three quarter period ended
September 30, 1995 to 46.6% in the three quarter period ended September 28,
1996. The net increase in selling, general and administrative expenses is
attributable to increased payroll costs associated with additional personnel
required to support existing sales levels, and increased operating costs
associated with new markets opened in 1995, offset by lower marketing expenses
associated with mailing third-class postage and lower prospect mailing
circulation.
Interest
Interest income of $45,000 was generated in the three quarter period ended
September 30, 1995 as a result of invested cash and cash equivalents. Interest
expense of $210,000 was incurred in the three quarter period ended September 28,
1996 as a result of net borrowings under the Company's line of credit.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)
Provision for Income Taxes
The Company's provision (benefit) for income taxes for the three quarter
period ended September 28, 1996 reflects a 40% effective income tax rate
anticipated for the full year ended December 31, 1996. In the three quarter
period ended September 30, 1995, the Company's effective income tax rate was 38%
as a result of anticipated tax benefits from municipal bond interest income.
During the three quarter period ended September 28, 1996, the Company recorded
deferred income tax benefit of $184,000. Deferred income taxes as of
September 28, 1996 relate to the tax benefit of the current year net operating
loss and cumulative temporary differences between book and tax earnings which
will reduce the Company's future tax obligations.
Liquidity and Capital Resources
The Company's primary working capital needs include the cost of prospect
mailings and other expenses associated with promoting increased sales volumes.
As of September 28, 1996, the Company had cash and cash equivalents totaling
$713,000. In addition, the Company has a credit facility with Bank of Boston
comprised of a revolving discretionary demand line of credit in the maximum
principal amount equal to the lesser of 50% of qualifying inventory or
$5.0 million (the "Line of Credit"). The Line of Credit bears interest at the
Bank of Boston's base rate (which approximates the prime rate) plus one-quarter
percent, and is collateralized by substantially all of the assets of the
Company. As of September 28, 1996, $3,005,863 was outstanding under the Line of
Credit.
During the three quarter period ended September 28, 1996, net cash of
$523,785 was provided by operating activities, resulting principally from
reductions of inventories and accounts payable.
Net cash of $621,851 was used for investing activities, representing
primarily investments in leasehold improvements and
computer systems.
At December 31, 1995 and September 28, 1996, the Company had working
capital of $8,694,000 and $8,271,000, respectively. The decrease in working
capital was primarily due increased investment in leasehold improvements and
computer systems.
The Company presently believes that cash flows from operations and current
cash balances, together with the Line of Credit, will be sufficient to meet the
Company's working capital and capital expenditure requirements for the
foreseeable future.
Exchange Rates
The Company often engages in currency-hedging activities related to firm
commitments for the purchase of inventories in an effort to fix costs and manage
the impact of exchange rate fluctuations. The Company has two foreign exchange
lines of credit which allow the Company to enter into forward currency exchange
contracts of up to $1,000,000 maturing on any one day. As of September 28,
1996, the Company had obligations in respect of forward currency exchange
contracts totaling $917,602. These contracts will mature in the fourth quarter
of 1996.
Certain Factors That May Affect Future Operating Results
The foregoing forward-looking statement involves risks and uncertainties.
The Company's actual performance and results may differ materially due to many
important factors, including, but not limited to, the highly regulated nature of
the of the alcoholic beverage industry, the effectiveness of the Company's
direct mail marketing campaigns, increases in postage and mailing rates, the
Company's dependence on wine selection and sourcing, fluctuations in currency
exchange rates and fluctuations in operating results due in part to competition,
general economic conditions and the like. For a more comprehensive discussion
of the risks associated with ownership of the Company's Common Stock, please
refer to Exhibit 99 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
8
<PAGE>
PART II. OTHER INFORMATION
Item 5.
On September 9, 1996, the Company named Jay L. Essa as President, Treasurer and
Chief Executive Officer. Mr. Essa succeeded Company co-founder Phillip D. Wade.
Mr. Wade will continue to serve as a director of the Company.
Item 6.
(a) Exhibits
10.40 Lease agreement between the Company and Debra Campbell
dated July 15, 1996.
10.41 Lease agreement between the Company and Simon Champagne
dated July 24, 1996.
10.42 Employment letter agreement between the Company and
Jay L. Essa dated September 9, 1996.
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
September 28, 1996.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GEERLINGS & WADE, INC.
(Registrant)
By: /s/ Jay L. Essa
---------------
Name: Jay L. Essa
Title: President and Chief Executive Officer
By: /s/ Peter F. McAree
-------------------
Name: Peter F. McAree
Title: Vice-President and Chief Financial Officer
Dated: November 12, 1996
10
<PAGE>
Exhibit 10.40
This Lease, dated the 15th day of JULY 1996
Between
DEBRA CAMPBELL hereinafter referred to as the Landlord, and
Parties Geerlings and Wade, Inc. hereinafter referred to as the
Tenant, WITNESSETH: That the Landlord hereby demises and
leases unto the Tenant, and the Tenant hereby hires and takes
from the Landlord for the term and upon the rentals
hereinafter specified, the premises described as follows,
situated in the County of Tolland and the State of Conn.
Premises Northfield Commons, 64 Field Road Unit 2E, Somers, Conn.
Term The term of this demise shall be for 5 years beginning
August 1 1996 and ending July 30, 2001
Rent The rent for the demised term shall be ($ 57,000.00 ),
which shall accrue at the yearly rate of $950.00 per month or
11,400.00 per year
The said rent is to be payable monthly in advance on the
first day of each calendar month for the term hereof, in
instalments as follows:
Payment of Rent 950.00 per month including all common area maintenance,
taxes and insurance which are the Landlords responsibility.
at the office of or as may be otherwise directed by the
Landlord in writing
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:
Peaceful First.--The Landlord covenants that the Tenant, on
Possession paying the said rental and performing the covenants and
conditions in this Lease contained, shall and may peaceably
and quietly have, hold and enjoy the demised premises for the
term aforesaid.
Second.--The Tennant covenants and agrees to use the
demised premises as a Premise will be used for warehouse
space and retail sales as permitted by law.
Purpose and agrees not to use or permit the premises to be used for
any other purpose without the prior written consent of the
Landlord endorsed hereon.
Default in Third.--The Tenant shall, without any previous demand
Payment of Rent therefor, pay to the Landlord, or its agent, the said rent at
the times and in the manner above provided. In the event of
Abandonment of the non-payment of said rent, or any instalment thereof, at
Premises the times and in the manner above provided, and if the same
shall remain in default for ten days after becoming due, or
Re-entry and if the Tenant shall be dispossessed for non-payment of rent,
Reletting by or if the leased premises shall be deserted or vacated, the
Landlord Landlord or its agents shall have the right to and may enter
the said premises as the agent of the Tenant, either by force
Tenant Liable for or otherwise, without being liable for any prosecution or
Deficiency damages therefor, and may relet the premises as the agent of
the Tenant, and receive the rent therefor, upon such terms as
Lien of Landlord shall be satisfactory to the Landlord, and all rights of the
to Secure Tenant to repossess the premises under this lease shall be
forfeited. Such re-entry by the Landlord shall not operate to
release the Tenant from any rent to be paid or covenants to
be performed hereunder during the full term of this lease.
For the purpose of reletting, the Landlord shall be
authorized to make such repairs or alterations in or to the
leased premises as may be necessary to place the same in good
order and condition. The Tenant shall be liable to the
Landlord for the cost of such repairs or alterations, and all
expenses of such reletting. If the sum realized or to be
realized from the reletting is insufficient to satisfy the
monthly or term rent provided in this lease, the Landlord, at
its option, may require the Tenant to pay such deficiency
month by month, or may hold the Tenant in advance for the
entire deficiency to be realized during the term of the
reletting. The Tenant shall not be entitled to any surplus
accruing as a result of the reletting.
Performance The Tenant agrees to pay, as additional rent, all
Attorney's Fees attorney's fees and other expenses incurred by the Landlord
in enforcing any of the obligations under this lease.
Sub-letting and Fourth--The Tenant shall not sub-let the demised
Assignment premises nor any portion thereof, nor shall this lease be
assigned by the Tenant without the prior written consent of
the Landlord endorsed hereon. "Such landlord's approval shall
not be reasonable withheld."
Condition of Fifth--The Tenant has examined the demised promises, and
Premises, accepts them in their present condition (except as otherwise
Repairs expressly provided herein) and without any representations on
the part of the Landlord or its agents as to the present or
future condition of the said premises. The Tenant shall keep
the demised premises in good condition, and shall redecorate,
paint and renovate the said premises as may be necessary to
keep them in repair and good appearance. The Tenant shall
quit and surrender the premises at the end of the demised
term in as good condition as the reasonable use thereof will
permit. The Tenant shall not make any alterations, additions,
or improvements to said premises without the
<PAGE>
Alterations and prior written consent of the Landlord. All erections,
Improvements alterations, additions and improvements, whether temporary or
permanent in character, which may be made upon the premises
Sanitation, either by the Landlord or the Tenant, except furniture or
Inflammable movable trade fixtures installed at the expense of the
Materials Tenant, shall be the property of the Landlord and shall
remain upon and be surrendered with the premises as a part
Sidewalks thereof at the termination of this Lease, without
compensation to the Tenant. The Tenant further agrees to keep
said premises and all parts thereof in a clean and sanitary
condition and free from trash, inflammable material and other
objectionable matter.
Sixth.--In the event that any mechanics' lien is
Mechanics' filed against the premises as a result of alterations,
Liens additions or improvements made by the Tenant, the Landlord,
at its option, after thirty days' notice to the Tenant, may
terminate this lease and may pay the said lien, without
inquiring into the validity thereof, and the Tenant shall
forthwith reimburse the Landlord the total expense incurred
by the Landlord in discharging the said lien, as additional
rent hereunder.
Seventh.--The Tenant agrees to replace at the
Glass Tenant's expense any and all glass which may become broken in
and on the demised premises. Plate glass and mirrors, if any,
shall be insured by the Tenant at their full insurable value
in a company satisfactory to the Landlord. Said policy shall
be of the full premium type, and shall be deposited with the
Landlord or its agent.
Eighth.--The Landlord shall not be responsible for
Liability of the loss of or damage to property, or injury to persons,
Landlord occurring in or about the demised premises, by reason of any
existing or future condition, defect, matter or thing in said
demised premises or the property of which the premises are a
part, or for the acts, omissions or negligence of other
persons or tenants in and about the said property. The Tenant
agrees to indemnify and save the Landlord harmless from all
claims and liability for losses of or damage to property, or
injuries to persons occurring in or about the demised
premises, "except for landlord's negligence or willful
misconduct"
Ninth.--Utilities and services furnished to the
Services and demised premises for the benefit of the Tenant shall be
Utilities provided and paid for as follows: water by the landlord; gas
by the tenant; electricity by the tenant; heat by the tenant;
refrigeration by the tenant; hot water by the tenant.
The Landlord shall not be liable for any interruption or
delay in any of the above services for any reason.
Tenth.--The Landlord, or its agents, shall have the
Right to Inspect right to enter the demised premises at reasonable hours in
and Exhibit the day or night to examine the same, or to run telephone or
other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety,
preservation or restoration of the improvements, or for the
safety or convenience of the occupants or users thereof
(there being no obligation, however, on the part of the
Landlord to make any such repairs, additions or alterations),
or to exhibit the same to prospective purchasers and put upon
the premises a suitable "For Sale" sign. For three months
prior to the expiration of the demised term, the Landlord, or
its agents, may similarly exhibit the premises to prospective
tenants, and may place the usual "To Let" signs thereon.
Eleventh.--In the event of the destruction of the
Damage by Fire, demised premises or the building containing the said premises
Explosion, by fire, explosion, the elements or otherwise during the term
The Elements or hereby created, or previous thereto, or such partial
Otherwise destruction thereof as to render the premises wholly
untenantable or unfit for occupancy, or should the demised
premises be so badly injured that the same cannot be repaired
within ninety days from the happening of such injury, then
and in such case the term hereby created shall cease and
become null and void from the date of such damage or
destruction, and the Tenant shall immediately surrender said
premises and all the Tenant's interest therein to the
Landlord, and shall pay rent only to the time of such
surrender, in which event the Landlord may re-enter and re-
possess the premises thus discharged from this lease and may
remove all parties therefrom. Should the demised premises be
rendered untenantable and unfit for occupancy, but yet be
repairable within ninety days from the happening of said
injury, the Landlord may enter and repair the same with
reasonable speed, and the rent shall not accrue after said
injury or while repairs are being made, but shall recommence
immediately after said repair shall be completed. But if the
premises shall be so slightly injured as not to be
rendered untenantable and unit for occupancy, then the
Landlord agrees to repair the same with reasonable promptness
and in that case the rent accrued and accruing shall not
cease or determine. The Tenant shall immediately notify the
Landlord in case of fire or other damage to the premises.
Twelfth.--The Tenant agrees to observe and comply
Observation with all laws, ordinances, rules and regulations of the
of Laws, Federal, State, County and Municipal authorities applicable
Ordinances, to the business to be conducted by the Tenant in the demised
Rules and premises. The Tenant agrees not to do or permit anything to
Regulations be done in said premises, or keep anything therein, which
will increase the rate of fire insurance premiums on the
improvements or any part thereof, or on property kept
therein, or which will obstruct or interfere with the rights
of other tenants, or conflict with the regulations of the
Fire Department or with any insurance policy upon said
improvements or any part thereof. In the event of any
increase in insurance premiums resulting from the Tenant's
occupancy of the premises, or from any act or omission on the
part of the Tenant, the Tenant agrees to pay said increase in
insurance premiums on the improvements or contents thereof as
additional rent.
Thirteenth.--No sign, advertisement or notice shall
Signs be affixed to or placed upon any part of the demised premises
by the Tenant, except in such manner, and of such size,
design and color as shall be approved in advance in writing
by the Landlord.
Fourteenth.--This lease is subject and is hereby
Subordination subordinated to all present and future mortgages, deeds of
to Mortgages trust and other encumbrances affecting the demised premises
and Deeds or the property of which said premises are a part. The Tenant
of Trust agrees to execute, at no expense to the Landlord, any
instrument which may be deemed necessary or desirable by the
Landlord to further effect the subordination of this lease to
Sale of any such mortgage, deed of trust or encumbrance.
Premises
Sixteenth.--The rules and regulations regarding the
Rules and demised premises, affixed to this lease, if any, as well as
Regulations of any other and further reasonable rules and regulations which
Landlord shall be made by the Landlord, shall be observed by the
Tenant and by the Tenant's employees, agents and customers.
The Landlord reserves the right to rescind any presently
existing rules applicable to the demised premises, and to
make such other and further reasonable rules and regulations
as, in its judgment, may from time to time be desirable for
the safety, care and cleanliness of the premises, and for the
preservation of good order therein, which rules, when so made
and notice thereof given to the Tenant, shall have the same
force and effect as if originally made a part of this lease.
Such other and further rules shall not, however, be
inconsistent with the proper and rightful enjoyment by the
Tenant of the demised premises.
Violation of Seventeenth.--In case of violation by the Tenant of
Covenants, any of the covenants, agreements and conditions of this
Forfeiture of lease, or of the rules and regulations now or hereafter to be
Lease, Re-entry reasonably established by the Landlord, and upon failure to
by Landlord discontinue such violation within ten days after notice
thereof given to the Tenant, this lease shall thenceforth, at
Non-waiver the option of the Landlord, become null and void, and the
of Breach Landlord may re-enter without further notice or demand. The
rent in such case shall become due, be apportioned and paid
on and up to the day of such re-entry, and the Tenant shall
be liable for all loss or damage resulting from such
violation as aforesaid. No waiver by the Landlord of any
violation or breach of condition by the Tenant shall
constitute or be construed as a waiver of any other violation
or breach of condition, nor shall lapse of time after breach
of condition by the Tenant before the Landlord shall exercise
its option under this paragraph operate to defeat the right
of the Landlord to declare this lease null and void and to
re-enter upon the demised premises after the said breach or
violation.
<PAGE>
Notices Eighteenth.--All notices and demands, legal or
otherwise, incidental to this lease, or the occupation of the
demised premises, shall be in writing. If the Landlord or its
agent desires to give or serve upon the Tenant any notice or
demand, it shall be sufficient to send a copy thereof by
registered mail, addressed to the Tenant at the demised
premises, or to leave a copy thereof with a person of
suitable age found on the premises, or to post a copy thereof
upon the door to said premises. Notices from the Tenant to
the Landlord shall be sent be registered mail or delivered to
the Landlord at the place hereinbefore designated for the
payment of rent or to such party or place as the Landlord may
from time to time designate in writing. / Geerlings & Wade,
860 Turnpike St., Canton, MA 02021, Attn: Peter McAree
Bankruptcy Nineteenth.--It is further agreed that if at any time
Insolvency, during the term of this lease the Tenant shall make any
Assignment for assignment for the benefit of creditors, or be decreed
Benefit of insolvent or bankrupt according to law, or if a receiver
Creditors shall be appointed for the Tenant, then the Landlord may, at
its option, terminate this lease, exercise of such option to
be evidenced by notice to that effect served upon the
assignee, receiver, trustee or other person in charge of the
liquidation of the property of the Tenant or the Tenant's
estate, but such termination shall not release or discharge
may payment of rent payable hereunder and then accrued, or
any liability then accrued by reason of any agreement of
covenant herein contained on the part of the Tenant, or the
Tenant's legal representatives.
Holding Over Twentieth.--In the event that the Tenant shall remain in
by Tenant the demised premises after the expiration of the term of this
lease without having executed a new written lease with the
Landlord, such holding over shall not constitute a renewal or
extension of this lease. The Landlord may, at its option,
elect to treat the Tenant as one who has not removed at the
end of his term, and thereupon be entitled to all the
remedies against the Tenant provided by law in that
situation, or the Landlord may elect, at its option, to
construe such holding over as a tenancy from month to month,
subject to all the terms and conditions of this lease, except
as to duration thereof, and in that event the Tenant shall
pay monthly rent in advance at the rate provided herein as
effective during the last month of the demised term.
Eminent Domain, Twenty-first.--If the property or any part thereof
Condemnation wherein the demised premises are located shall be taken by
public or quasi-public authority under any power of eminent
domain or condemnation, this lease, shall forthwith terminate
and the Tenant shall have no claim or interest in or to any
award of damages for such taking.
Security Twenty-second.--The Tenant has this day deposited with
the Landlord the sum of $ 400.00 as security for the full and
faithful performance by the Tenant of all the terms,
covenants and conditions of this lease upon the Tenant's part
to be performed which said sum shall be returned to the
Tenant after the time fixed as the expiration of the term
herein, provided the Tenant has fully and faithfully carried
out all of said terms, covenants and conditions on Tenant's
part to be performed. In the event of a bona fide sale,
subject to this lease, the Landlord shall have the right to
transfer the security to the vendee for the benefit of the
Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security;
and the Tenant agrees to look to the new Landlord solely for
the return of the said security, and it is agreed that this
shall apply to every transfer or assignment made of the
security to a new Landlord. The security deposited under this
lease shall not be mortgaged, assigned or encumbered by the
Tenant without the written consent of the Landlord.
Arbitration Twenty-third.--Any dispute arising under this lease
shall be settled by arbitration. Then Landlord and Tenant
shall each choose an arbitrator, and the two arbitrators thus
chosen shall select a third arbitrator. The findings and
award of the three arbitrators thus chosen shall be final and
binding on the parties hereto.
Delivery Twenty-fourth.--No rights are to be conferred upon the
of Lease Tenant until this lease has been signed by the Landlord, and
an executed copy of the lease has been delivered to the
Tenant.
Twenty-fifth.--The foregoing rights and remedies are not
intended to be exclusive but as additional to all rights, and
remedies the Landlord would otherwise have by law.
Lease Provisions Twenty-sixth.--All of the terms, covenants and
Not Exclusive conditions of this lease shall insure to the benefit of and
be binding upon the respective heirs, executors,
administrators, successors and assigns of the parties hereto.
However, in the event of the death of the Tenant, if an
individual, the Landlord may, at its option, terminate this
lease by notifying the executor or administrator of the
Tenant at the demised premises.
Lease Binding Twenty-seventh.--This lease and the obligation of Tenant
on Heirs, to pay rent hereunder and perform all of the other covenants
Successors, Etc. and agreements hereunder on part of Tenant to be performed
shall in nowise be affected, impaired or excused because
Landlord is unable to supply or is delayed in supplying any
service expressly or impliedly to be supplied or is unable to
make, or is delayed in making any repairs, additions,
alterations or decorations or is unable to supply or is
delayed in supplying any equipment or fixtures if Landlord is
prevented or delayed from so doing by reason of governmental
preemption in connection with the National Emergency declared
by the President of the United States or in connection with
any rule order or regulation of any department or subdivision
thereof of any governmental agency or by reason of the
conditions of supply and demand which have been or are
affected by the war.
Twenty-eighth.--This instrument may not be changed
orally.
SEE RIDER ADDENDUM A.
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and
seals the day and year first above written.
Witness: /s/ Debra Campbell (SEAL)
----------------------------
/s/ Leslie A. Varnerin By Geerlings & Wade, Inc.
- - --------------------------------- ----------------------------
Leslie A. Varnerin By /s/ Peter F. McCree (SEAL)
- - --------------------------------- ----------------------------
Tenant
Peter F. McCree 8/1/96
VP & CFO
<PAGE>
RIDER ADDENDUM A
Landlords agree to the following terms pursuant to the lease agreement:
. Landlord's, as individual owners of 64 Field Road Units 2C, 2D, 2E, and 2F
agree that all demolition and alteration costs performed in accordance with
Tenant specifications will be uniformly borne by the Landlords.
. $1,000 alteration allowance to be granted to tenant upon signing of lease
Signed:
/s/ Deborah Campbell
- - -----------------------------------
Deborah Campbell
- - -----------------------------------
George Ramsey
- - -----------------------------------
Simon Champagne
<PAGE>
Exhibit 10.41
THIS LEASE, dated the 24th day of July 1996
Between Simon Champagne
hereinafter refered to as the Landlord,
and
Geerling & Wade, INC., a Massachusetts Corporation
hereinafter referred to as the Tenant,
WITNESSETH: That the Landlord hereby demises and leases unto the Tenant, and the
Tenant hereby hires and takes from the Landlord for the term and upon the
rentals hereinafter specified, the premises described as follows, situated in
the Town of Somers
County of Hartford and State of Connecticut,
64 Field Road, Units 2C&2D
Consisting of total area of 3,000 square feet
The term of this demise shall be for five (5) years
beginning August 1, 1996 and ending July 31, 2,001
with an option to renew for another five years at a future agreed upon rent.
The rent for the demised term shall be Nine Hundred Seventy Five and 00/100
Dollars per month per unit ($975.00) which shall accrue at the yearly rate of
Eleven Thousand and seven hundred 00/100 (11,700.00) Dollars per unit.
The said rent is to be payable monthly in advance on the first day of each
calendar month for the term hereof, in installments as follows: $975.00 per
month per unit including all common area maintenance, taxes and insurance are
the Landlord's responsibility.
at the office of Simon Champagne, 202 Mountain Road, Somers, CT 06071
or as may be otherwise directed by the Landlord in writing.
The above letting is upon the following conditions:
First.--The Landlord covenants that the Tenant, on paying the said rental
and performing the covenants and conditions in this Lease contained, shall and
may peaceably and quietly have, hold and enjoy the demised premises for the term
aforesaid.
Second.--The Tenant covenants and agrees to use the demised premises as an
Office and Warehouse for a retail wine business known as Geerling & Wade, 960
Turnpike St., Canton MA 02021 Phone # 617-821-4152
and agrees not to use or permit the premises to be used for any other purpose
without the prior written consent of the Landlord endorsed hereon.
Third.--The Tenant shall, without any previous demand therefor, pay to the
Landlord, or its agent, the said rent at the times and in the manner above
provided. In the event of the non payment of said rent, or any installment
thereof, at the times and in the manner above provided, and in the same shall
remain in default for ten days after becoming due, or if the Tenant shall be
dispossessed for non payment of rent, or if the leased premises shall be
deserted or vacated, the Landlord or its agents shall have the right to and may
enter the said premises as the agent of the Tenant, either by force or
otherwise, without being liable for any prosecution or damages therefor, and may
relet the premises as the agent of the Tenant to repossess the premises under
this lease shall be forfeited. Such re-entry by the Landlord shall not operate
to release the Tenant from any rent to be paid or covenants to be performed
hereunder during the full term of this lease. For the purpose of reletting, the
Landlord shall be authorized to make such repairs or alterations in or to the
leased premises as may be necessary to place the same in good order and
condition. The Tenant shall be liable to the Landlord for the cost of such
repairs or alterations, and all expenses of such reletting. If the sum realized
or to be realized from the reletting is insufficient to satisfy the monthly or
term rent provided in this lease, the Landlord, at its option, may require the
Tenant to pay such deficiency month by month, or may hold the Tenant in advance
for the entire deficiency to be realized during the term of the reletting. The
Tenant shall be entitled to any surplus accruing as a result of the reletting.
Fourth.--The Tenant shall not sub-let the demises premises nor any portion
thereof, nor shall this lease be assigned by the Tenant without the prior
consent of the Landlord endorsed hereon. Such landlord's approval shall not be
unreasonable withheld.
<PAGE>
Fifth.--The Tenant has examined the demised premises, and accepts them
in their present condition (except as otherwise expressly provided herein) and
without any representations on the part of the Landlord or its agents as to the
present or future condition of the said premises. The Tenant shall keep the
demised premises in good condition, and shall redecorate, paint and renovate the
said premises as may be necessary to keep them in repair and good appearance.
The Tenant shall quit and surrender the premises at the end of the demised term
in as good condition as the reasonable use thereof will permit. The Tenant shall
not make any alterations, additions, or improvements to said premises without
the prior written consent of the Landlord. All erections, alterations, additions
and improvements, whether temporary or permanent in character, which may be made
upon the premises either by the Landlord or the Tenant, except furniture or
movable trade fixtures installed at the expense of the Tenant, shall be the
property of the Landlord and shall remain upon and be surrendered with the
premises as part thereof at the termination of this Lease, without compensation
to the Tenant. The Tenant further agrees to keep said premises and all parts
thereof in a clean and sanitary condition and free from trash, inflammable
material and other objectionable matter.
Sixth.--In the event that any mechanic's lien if filed against the
premises as a result of alterations, additions or improvements made by the
Tenant, the Landlord, as its option after thirty day's notice to the Tenant, may
terminate this lease and may pay the said lien, without inquiring into the
validity thereof, and the Tenant shall forthwith reimburse the Landlord the
total expense incurred by the Landlord in discharging the said lien, as
additional rent be deposited with the Landlord or its agent.
Seventh.--The Tenant agrees to replace at the Tenant's expense any and
all glass which may become broken in and on the demised premises. Plate glass
and mirrors, if any, shall be insured by the Tenant at their full insurable
value in a company satisfactory to the Landlord. Said policy shall be of the
full premium type, and shall be deposited with the Landlord or its agent.
Eight.--The Landlord shall not be responsible for the loss of or damage
to property, or injury to persons, occurring in or about the demised premises,
by reason of any existing or future condition, defect, matter or thing in said
demised premises or to the property of which the premises are part, or for the
acts, omissions or negligence of other persons or tenants in and about the said
property. The Tenant agrees to indemnify and save the Landlord harmless from all
claims and liability for losses of or damage to property, or injuries to persons
occurring in or about the demised premises, except for landlords negligence or
willful misconduct.
Ninth.--Utilities and services furnished to the demised premises for the
benefit of the Tenant shall be provided and paid for as follows;
water by the Landlord ; gas by the Tenant ;
electricity by the Tenant ; heat by the Tenant ;
refrigeration by the Tenant ; hot water by the Tenant.
The Landlord shall not be liable for any interruption or delay in any of the
above services for any reason.
Tenth.--The Landlord, or its agents, shall have the right to enter the
demised premises at reasonable hours in the day or night to examine the same, or
to run telephone or other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety, preservation or
restoration of the improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation, however, on the part of
the Landlord to make any such repairs, additions or alterations), or to exhibit
the same to prospective purchasers and put upon the premises a suitable "For
Sale" sign. For three months prior to the expiration of the demised term, the
Landlord, or its agents, may similarly exhibit the premises to prospective
tenants, and may place the usual "To Let" signs thereon.
Eleventh.--In the event of the destruction of the demised premises or
the building containing the said premises by fire, explosion, the elements or
otherwise during the term hereby created, or previous thereto, or such partial
destruction thereof as to render the premises wholly untenantable or unfit for
occupancy, or should the demised premises be so badly injured that the same
cannot be repaid within [SIC] ninety days from the happening of such injury,
then and in such case the term hereby created shall cease and become null and
void from the date of such damage or destruction, and the Tenant shall
immediately surrender said premises and all the Tenant's interest therein to the
Landlord, and shall pay rent only to the time of such surrender, in which event
the Landlord may reenter and re-possess the premises thus discharged from this
lease and may remove all parties therefrom. Should the demised premises be
rendered untenantable and unfit for occupancy, but yet be repairable within
ninety days from the happening of said injury, the Landlord may enter and repair
the same with reasonable speed, and the rent shall not accrue after said injury
or while repairs are being made, but shall recommence immediately after said
repairs shall be completed. But if the premises shall be so slightly injured as
not to be rendered untenantable and unfit for occupancy then the Landlord agrees
to repair the same with reasonable promptness and in that case the rent accrued
and accruing shall not cease or determine. The Tenant shall immediately notify
the Landlord in case of fire or other damage to the premises.
Twelfth.--The Tenant agrees to observe and comply with all laws,
ordinances, rules and regulations of the Federal, State, County and Municipal
authorities applicable to the business to be conducted by the Tenant in the
demised premises. The Tenant agrees not to do or permit anything to be done in
said premises, or keep anything therein, which will increase the rate of fire
insurance premiums on the improvements or any part thereof, or on the property
kept therein, or which will obstruct or interfere with
<PAGE>
the rights of other tenants, or conflict with the regulations of the Fire
Department or with any insurance policy upon said improvements or any thereof.
In the event of any increase in insurance premiums reasonably proving to result
from the Tenant's occupancy of the premises, or from any act or omission on the
part of the Tenant, the Tenant agrees to pay said increase in insurance premiums
on the improvements or contents thereof as additional rent.
Thirteenth.--No sign, advertisement or notice shall be affixed to or
placed upon any part of the demised premises by the Tenant, except in such
manner, and of such size, design and color as shall be approved in advance in
writing by the Landlord.
Fourteenth.--This lease is subject and is hereby subordinated to all
present and future mortgages, deeds of trust and other encumbrances affecting
the demised premises or the property of which said premises are a part. The
Tenant agrees to execute, at no expense to the Landlord, any instrument which
may be deemed necessary or desirable by the Landlord to further effect the
subordination of this lease to any such mortgage, deed of trust or encumbrance.
Fifteenth.--Intentionally left blank.
Sixteenth.--The rules and regulations regarding the demised premises,
affixed to this lease, if any, as well as any other and further reasonable rules
and regulations which shall be made by the Landlord, shall be observed by Tenant
and by the Tenant's employees, agents and customers. The Landlord reserves the
right to rescind any presently existing rules applicable to the demised
premises, and to make such other and further reasonable rules and regulations
as, in its judgment, may from time to time be desirable for the safety, care and
cleanliness of the premises, and for the preservation of good order therein,
which rules, when so made and notice thereof given to the Tenant, shall have the
same force and effect as if originally made a part of this lease, Such other and
further rules shall not, however, be inconsistent with the proper and rightful
enjoyment by the Tenant of the demised premises.
Seventeenth.--In case of violation by the Tenant of any of the covenants,
agreements and conditions of this lease, or of the rules and regulations not or
hereafter to be reasonably established by the Landlord, and upon failure to
discontinue such violation within ten days after notice thereof given to the
Tenant, this lease shall thenceforth, at the option of the Landlord, become null
and void, and the Landlord may re-enter without further notice or demand. The
rent in such case shall become due, be apportioned and paid on the up to the day
of such re-entry, and the Tenant shall be liable for all loss or damage
resulting from such violation as aforesaid, No waiver be the Landlord of any
violation or breach of condition by the Tenant shall constitute or be construed
as a waiver of any other violation or breach of condition nor shall lapse of
time after breach of condition by the Tenant before the Landlord shall exercise
its option under this paragraph operate to defeat the right of the Landlord to
declare this lease null and void and to re-enter upon the demised premises after
the said breach or violation.
Eighteenth.--All notices and demands, legal or otherwise, incidental to
this lease, or the occupation of the demised premises, shall be in writing, If
the Landlord or its agent desires to give or serve upon the Tenant any notice or
demand, it shall be sufficient to send a copy thereof by registered mail,
addressed to the Tenant at the demised premises, or to leave a copy thereof with
a person of suitable age found on the premises, or to post a copy thereof upon
the door to said premises. Notices from the Tenant to the Landlord shall be sent
by registered mail or delivered to the Landlord at the place hereinbefore
designated for the payment of rent, or to such party or place as the Landlord
may from time to time designate in writing at 960 Turnpike St., Canton Ma.
02021, attention to Mr. Peter McAree.
Nineteenth.--It is further agreed that if at any time during the term of
this lease the Tenant shall make any assignment for the benefit of creditors, or
be decreed insolvent or bankrupt according to law, or if a receiver shall be
appointed for the Tenant then the Landlord may, at its option, terminate this
lease, exercise of such option to be evidenced by notice to that effect served
upon the assignee, receiver, trustee or other person in charge of the
liquidation of the property of the Tenant or the Tenant's estate, but such
termination shall not release or discharge any payment of rent payable hereunder
and then accrued, or any liability then accrued by reason of any agreement or
covenant herein contained on the part of the Tenant, or the Tenant's legal
representatives.
Twentieth.--In the event that the Tenant shall remain in the demised
premises after the expiration of the term of this lease without having executed
a new written lease with the Landlord, such holding over shall not constitute a
renewal or extension of this lease, The Landlord may, at its option, elect to
treat the Tenant as one who has not removed at the end of his term and thereupon
be entitled to all the remedies against the Tenant provided by law in that
situation, or the Landlord may elect, at its option, to construe such holding
over as a tenancy from month to month, subject to all the terms and conditions
of this lease,except as to duration thereof, and in that event the Tenant shall
pay monthly rent in advance at the rate provided herein as effective during the
last month of the demised term.
Twenty-first.--If the property or any part thereof wherein the demised
premises are located shall be taken by public or quasi-public authority under
any power of eminent domain or condemnation, this lease, shall forthwith
terminate and the Tenant shall have no claim or interest in or to any award of
damages for such taking.
<PAGE>
Twenty-second.--The Tenant has this day deposited with the Landlord the
sum of $ 2850.00 as security for the full and faithful performance by the Tenant
of all the terms, covenants and conditions of this lease upon the Tenant's part
to be performed, which said sum shall be returned to Tenant after the time fixed
as the expiration of the term herein, provided the Tenant has fully and
faithfully carried out all of said terms, covenants and conditions on Tenant's
part to be performed. In the event of a bona fide sale, subject to this lease,
the Landlord shall have the right to transfer the security to the vendee for the
benefit of the Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and the Tenant agrees
to look to the new Landlord solely for the return of the said security, and it
is agreed that this shall apply to every transfer or assignment made of the
security to a new Landlord. The security deposited under this lease shall not be
mortgaged, assigned or encumbered by the Tenant without the written consent of
the Landlord.
Twenty-third.--Any dispute arising under this lease shall be settled by
arbitration. Then Landlord and Tenant shall each choose an arbitrator, and the
two arbitrators thus chosen shall select a third arbitrator. The finding and
award of the three arbitrators thus chosen shall be final and binding on the
parties hereto.
Twenty-fourth.--No rights are to be conferred upon the Tenant until this
lease has been signed by the Landlord, and a executed copy of the lease has been
delivered to the Tenant.
Twenty-fifth.--The foregoing rights and remedies are not intended to be
exclusive but as additional to all rights and remedies the Landlord would
otherwise have by law.
Twenty-sixth.--All of the terms, covenants and conditions of this lease
shall inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of the parties hereto.
However, in the event of the death of the Tenant, if an individual, the Landlord
may, at its option, terminate this lease by notifying the executor or
administrator of the Tenant at the demised premises.
Twenty-seventh.--This lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in nowise be affected, impaired or excused
because Landlord is unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repairs, additions, alterations or decoration or is unable to supply
or is delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with
the National Emergency declared by the President of the United States or in
connection with any rule, order or regulation of any department or subdivision
thereof of any governmental agency or by reason of the conditions of supply and
demand which have been or are affected by the war.
Twenty-eighth.--This instrument may not be changed orally.
Twenty-nine.--At the expiration of this lease the parties reserve the
right to negotiate options upon terms agreeable to both parties.
Thirty.--Landlord owner of 64 Field Road Units 2C, 2D agrees that all
demolition and alteration costs will be performed in accordance with Tenant
specifications, such cost to be borne by the Landlord. Specifically, upon
approval being received from the State of Connecticut Division of Liquor
Control, landlord will eliminate dividing wall between units 2C and 2D and will
demolish existing office location now located in unit 2D.
PER BUILDING PERMIT #10605
Thirty-one.--Tenant agrees to send a letter to Landlord of intentions
concerning renewal of lease six months prior to end of existing lease including
detailed information of changes and Tenant must sign a new lease 30 days prior
to July 31, 2001.
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and seals the
day and year first above written.
Witness: [SIGNATURE APPEARS HERE] 8/5/96
(SEAL) -------------------------------------
Landlord
[SIGNATURE APPEARS HERE]
- - ---------------------------------- By Geerling & Wade, Inc.-------------
(SEAL)
[SIGNATURE APPEARS HERE] 8/1/96
- - ---------------------------------- -------------------------------------
(SEAL) Vice President and Chief
Financial Officer
Tenant
<PAGE>
EXHIBIT 10.42
[GEERLINGS & WADE LETTERHEAD SET HERE]
September 9, 1996
Mr. Jay Essa
445 Marsh Meadow Way
Concord, CA 94521
Dear Jay:
On behalf of the Board of Directors of Geerlings & Wade, Inc., I am pleased to
formally offer you the position of President and Chief Executive Officer of
Geerlings & Wade, Inc. (the "Company"). As we discussed, should you accept this
offer, the Company would expect that you would assume your duties on September
9, 1996. In this role, you will report to, and serve at the pleasure of, the
Board and will have responsibility for all operational aspects of the management
of the Company and such other responsibilities as shall be assigned to you from
time to time by the Board.
In addition to the foregoing, the terms of your employment with the Company
shall be the following:
* You will receive an annual base salary of $200,000, payable in monthly
installments of $16,667 (less applicable legal deductions such as taxes) in
accordance with the regular payroll practices of the Company.
* You will be granted 100,000 stock options for the Company's common stock,
20,000 of which will vest as of the 15th of September 1996 (subject to the
receipt of routine regulatory approvals relative to your appointment). The
remaining stock options will vest in four equal increments of 20,000 on the
anniversary of your employment with the Company in 1997, 1998, 1999 and
2000. The exercise price of the options will be the closing price of the
Company's common stock on the date you commence your employment with the
Company.
* You will be eligible for participation in the Company's Employees Benefit
Plan, a copy of which has been sent to you under separate cover, and any
other plans from time to time made available by the Company to its senior
executives, in each case, subject to plan terms and generally applicable
Company policies.
* You will also be entitled to reimbursement of relocation expenses for you
and your family, subject to a maximum of $10,000.
* You will be expected to devote your full business time and your best
professional efforts to the performance of your duties and responsibilities
for the Company and to abide by all Company policies and procedures, as in
effect from time to time.
* You will be expected to executive a standard employee non disclosure
agreement.
<PAGE>
The Board of Directors and I are delighted at the prospect of your joining
Geerlings & Wade and we look forward to a mutually rewarding relationship.
Please acknowledge your agreement with the provisions set forth in this letter
in the space provided below for your signature.
Cordially,
Huib E. Geerlings
Chairman of the Board of Directors
Geerlings & Wade, Inc.
As agreed to September 9, 1996
/s/ JAY L. ESSA
- - ----------------------
Jay L. Essa
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-28-1996
<CASH> 713,164
<SECURITIES> 0
<RECEIVABLES> 267,823
<ALLOWANCES> 0
<INVENTORY> 10,860,867
<CURRENT-ASSETS> 13,802,347
<PP&E> 2,516,378
<DEPRECIATION> 934,780
<TOTAL-ASSETS> 15,544,980
<CURRENT-LIABILITIES> 5,531,554
<BONDS> 0
0
0
<COMMON> 37,775
<OTHER-SE> 9,716,255
<TOTAL-LIABILITY-AND-EQUITY> 15,544,980
<SALES> 22,030,693
<TOTAL-REVENUES> 22,030,693
<CGS> 12,024,052
<TOTAL-COSTS> 10,260,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 209,564
<INCOME-PRETAX> (463,153)
<INCOME-TAX> (184,000)
<INCOME-CONTINUING> (279,153)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (279,153)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
